NSW taxpayers set for $500m bill if Sydney light rail project fails

A fiery exchange in State Parliament leads to the NSW Government admitting it is the guarantor for a $500 million loan to keep the consortium building Sydney's light rail project afloat.

The Berejiklian Government admitted on Friday it was guarantor on a $500 million loan provided by private banks to the ALTRAC Light Rail Partnership, the consortium behind the project.

It means if ALTRAC goes under, NSW taxpayers are in line to pay back the loan.

The admission came after Labor announced they had "leaked" documents from sources within the NSW Department of Transport that they believed showed the Berejiklian Government was lending $500 million to the company.

It led to a fiery exchange in the state's budget estimate hearings, with Transport Minister Andrew Constance initially refusing to respond to repeated questions from Labor.

Mr Constance later clarified the loan to ALTRAC was from the private sector and "will be paid back".